Facebook, Yahoo end patent war with vague collaboration agreement

Facebook and Yahoo have ended their brief, contentious patent war with an agreement to work together, although what that means exactly remains to be seen.

The two Silicon Valley giants on Friday agreed to settle their legal disputes against each other as part of “definitive agreements that launch a new advertising partnership, extend and expand distribution arrangements,” according to a joint statement.

The two companies will also ross-license patents.

But the fact that the companies offered few specific details may indicate there are as yet few to offer.

“It sounds like they’ve agreed to have an agreement to agree,” said digital advertising analyst Rebecca Lieb of the Altimeter Group of San Mateo.

Still, the fact that Facebook and Yahoo have indeed set aside their legal disputes could open the door for more cooperation between the two companies.

“This is an agreement that could be highly beneficial for Yahoo, which is a company that needs all it can get right now and can certainly use some of that social mojo,” Lieb said.

The deal was approved by Yahoo’s board of directors in the morning, according to the Wall Street Journal’s All Things D, which first reported on the accord.

The announcement came after the close of trading on Wall Street at the end of a week that was interrupted by a holiday in the middle.

Yahoo – then led by CEO Scott Thompson – took Facebook to court in March on claims that the social network infringed on Yahoo’s patents covering Internet advertising, information sharing and privacy.

Then in April, Facebook filed a counterclaim, saying Yahoo infringed on Facebook’s patents through its home page, Flickr photo-sharing service and ads.

Yahoo’s suit roiled the tech community as critics blasted Thompson for using his company’s patents as offensive weapons instead of for defensive purposes.

But last month, the struggling Yahoo gave Thompson the boot and replaced him in the interim with Ross Levinsohn, who almost immediately began talks with Facebook Chief Operating Officer Sheryl Sandberg to end the dispute, according to All Things D.

The companies said that under terms of the agreement, they will “work together to bring consumers and advertisers premium media experiences promoted and distributed across both Yahoo and Facebook. Yahoo and Facebook will also work together to bring Yahoo’s large media event coverage to Facebook users by collaborating on social integrations on the Yahoo site.”

Levinsohn and Hulu CEO Jason Kilar were reportedly the two finalists for the permanent CEO job at Yahoo, but brokering peace with Facebook may have put Levinsohn over the top. Kilar has withdrawn his candidacy for the job.

In a statement about the patent agreement, Sandberg seems to be anticipating that Levinsohn will stick around for quite some time.

“I’m pleased that we were able to resolve this in a positive manner and look forward to partnering closely with Ross and the leadership at Yahoo,” she said. “Yahoo’s new leaders are driven by a renewed focus on innovation and providing great products to users. Together, we can provide users with engaging social experiences while creating value for marketers.”

The companies are extending older advertising agreements, but now that the lawsuits were dropped without rancor or under the force of a judge’s order, there are other areas they can work on together, Lieb said.

“Yahoo is still a large media company and really does have quality content,” she said. However, “with the exception of Flickr, they don’t have a strong social product, which is critically important right now.”